Courts are able to cut through the clutter. That is precisely what a federal appeals court did on Tuesday when it decided that the Environmental Protection Agency lacked the authority to revoke $20 billion in climate grants that the Biden administration had given to a number of nonprofits prior to its departure.
The entire U.S. Court of Appeals for the District of Columbia Circuit rendered the ruling. The judges were divided, so the decision wasn’t unanimous, but the majority was adamant that the EPA had acted improperly when it attempted to reclaim funds that had already been given to organizations established to manage the Greenhouse Gas Reduction Fund, also known as the “green bank.”
What precisely is the “green bank”? Fundamentally, it is a congressionally approved program intended to direct funds toward clean energy loans and investments, such as renewable energy projects, energy-efficient housing, and cleaner transportation. The recipients weren’t obscure shell corporations. These nonprofits were specifically selected to serve as financial intermediaries, distributing capital in areas where it is generally difficult to obtain.
Early in 2025, EPA Administrator Lee Zeldin made a move to end the grants due to mismanagement, fraud, and waste. To put it politely, the evidence he relied on was scant. A large portion of it was traced back to a hidden-camera video from Project Veritas, a group not exactly renowned for its journalistic objectivity, in which a former employee of the EPA used the phrase “gold bars off the Titanic.” The FBI and the agency’s inspector general were among the federal investigators who never confirmed the fraud allegations. However, the funds remained frozen.
There was actual, quantifiable damage during that freeze. The chief executive of Climate United, the primary plaintiff in the case, Beth Bafford resigned in March and was never replaced. Staff members from other recipient groups were quietly let go. At one point earlier this year, Power Forward Communities, which had received a $2 billion award, reportedly only had two employees. These were not inconveniences caused by bureaucracy. These were businesses that had built their operations around funds that were legally theirs, only to have those funds remain locked in a Citibank account while the lawsuit dragged on.
In April 2025, District Judge Tanya Chutkan issued a preliminary injunction that prevented the EPA from terminating the grants. The organization filed an appeal. This appeal is what the D.C. Circuit just made a decision, and it wasn’t in the government’s favor.
The administration still has time to file an appeal with the Supreme Court. The EPA has seven days from the date of the ruling to accomplish just that. Whether they will pursue it is still up in the air. According to an EPA spokesperson, the agency is considering its options and reviewing the ruling. A different and genuinely open question is whether the Supreme Court would consent to step in.
The decision was closely observed by legal observers. It’s “screamingly good news for the plaintiffs,” according to Michael Gerrard of Columbia University’s Sabin Center for Climate Change Law, who also acknowledged that the legal process might take a lot longer. In simpler terms, the practical effect is to thaw out what had become a deep freeze on the funds, according to David Super, a professor of law at Georgetown.
It’s more interesting to watch what this episode says about the administration’s initial approach to the program than the legal wrangling. The allegations of fraud were never validated. The evidence supporting the freeze was not produced by the inspector general’s investigations. However, over a year went by, organizations shrank or failed, and the money remained unaltered. It’s possible that the practical impact of freezing the funds was more important than winning the legal battle.
The nonprofits themselves are cautiously hopeful. The Coalition for Green Capital and the Justice Climate Fund said they are eager to get back to work. In a sharp statement, Climate United denounced what it called “false allegations and misinformation.”
The decision is a definite setback for the administration’s attempt to undermine Biden’s climate funding architecture, regardless of the outcome—appeal, trial, or summary judgment. The green bank is still in existence. Not just yet.
